Wednesday 7th January: Daily Technical outlook and review.

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EUR/USD:

Weekly Timeframe: The weekly timeframe shows that price has breached a major weekly demand area seen at 1.1875-1.2095. Assuming that the majority of buyers are consumed here, price will likely be free to test a weekly Quasimodo support level seen below at 1.1758.

Daily Timeframe: Yesterday’s trading sessions continued to show weakness on the Euro as price was seen closing deeper into daily demand at 1.1875-1.1971. It will be interesting to see what the 4hr timeframe has to say about this.

4hr Timeframe: From a technical standpoint the EUR/USD has moved very little since the previous analysis, and as such the Euro continues to loiter around the 1.1900 handle with both the buyers and sellers showing equal strength at the time of wiritng.

In the event that the buyers can hold prices above this level, further buying will likely be seen up to 1.2000 (a figure watched by many),which as a result will effectively fill the weekend gap.

However, we mustn’t forget that price is still trading within the lower limits of higher-timeframe demand (see above) at the moment, so naturally long positions are currently favored. Providing that attractive lower-timeframe buying confirmation is seen around 1.1900, we would be relatively comfortable entering long here, and attempting to target 1.1994, just below 1.2000, and potentially the 4hr decision-point supply area seen just above at 1.2068-1.2045 given enough time.

Hopefully within the next 24hrs we’ll have more to discuss, until then trade safe!

Current buy/sell levels:

Buy orders: Currently watching for lower-timeframe confirmation around 1.1900 (Predicative stop-loss orders seen at: dependent on where one confirms the level).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

GBP/USD:

Weekly Timeframe: The weekly timeframe continues to depict a negative outlook for the British pound, as price is currently being forced further below the long-term weekly trendline support (1.3500 – 19/01/2009). Providing that the sellers keep up with this tempo, we will likely see price test a weekly demand area coming in at 1.4812-1.5097 sometime soon.

Daily Timeframe: Nonetheless, for the sellers to continue pushing the GBP south, they’ll need to first contend with potential buying opposition from the current daily demand area seen at 1.5101-1.5206 (located just above the aforementioned weekly demand). It will be interesting to see what the 4hr timeframe has to say about this.

4hr Timeframe: Recent trading action on the 4hr timeframe shows that the buyers made a valiant attempt to trade higher from the 1.5200 handle, but were consequently stopped short in their tracks as strong sellers entered the market around a combined 4hr supply/round-number area at 1.5318-1.5272/1.5300. This momentum south saw price well and truly consume 1.5200, and subsequently hit a 4hr Quasimodo support area at 1.5101- 1.5206.

The pending buy order (see below) set just above this area was recently filled. Our first problematic resistance barrier comes in at 1.5200. Assuming that price rallies this high, we’ll be watching the lower-timeframes like a hawk for any sign of buying weakness. Ultimately though, we’re looking for price to break above 1.5200, as this would give us the confidence to move our stop breakeven and effectively target the aforementioned 4hr supply area.

Reasons for entering long are as follows:

Price is currently trading within daily demand (see above) at the moment.

A fresh 4hr Quasimodo support area (see above).

(At the time of setting the pending order) We did initially have a weekly trendline supporting this trade as well. Admittedly though, this is a little worrying for us at the moment as after our order was filled price was seen trading below this line.

AUD/USD:

Weekly Timeframe: The weekly timeframe reveals that price has recently pushed below a major weekly demand area at 0.8064-0.8460, which as a consequence could entice further selling down towards another weekly demand area coming in at 0.7699-0.7974.

Daily Timeframe: At the time of writing, the daily timeframe is suggesting that the buying pressure is continuing to weaken. This is due to the fact that the selling opposition around a minor daily supply area seen at 0.8214-0.8160 was clearly too overwhelming for buyers to cope with, as they attempted to rally price from daily demand at 0.7958-0.8070. Let’s see what the 4hr timeframe has to say about this.

4hr Timeframe: A minor 4hr Quasimodo resistance area at 0.8161-0.8158 (located just below the aforementioned minor daily supply area) has clearly provided the AUD/USD a temporary ceiling (resistance) so to speak. The recent selling that took place from here forced prices down to a combined 4hr decision-point demand/round-number area at 0.8079-0.8106/0.8100, where the buyers and sellers are currently battling for position at the moment.

Let’s quickly recap so that we’re all on the same page here. The weekly timeframe shows weekly demand has been breached which could spark further selling, while the daily timeframe indicates buying weakness around a daily demand area (see above). Therefore, with the above taken into consideration we feel there is a good chance that the Aussie will see a further decline in the near future. That being the case, we have absolutely no interest in buying this pair at present. However, we would be interested in selling once we see the buying opposition consumed around the aforementioned combined 4hr decision-point demand/round-number area.

Current buy/sell levels:

Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

​USD/JPY:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers still remain trading between a weekly Quasimodo resistance level coming in at 122.18 and a major weekly swap level at 115.50.

Daily Timeframe: Yesterday was clearly a good day for the sellers as price was driven deep into a daily swap area coming in at 119.19-118.04. Assuming that the sellers keep up with this enthusiasm and break below this area, this would likely promote further selling down towards the aforementioned major weekly swap level.

4hr Timeframe: The recent selling seen on this pair took out a combined 4hr demand/round-number area at 118.83-119.07/119.00, which resulted in further selling down towards the 118.00 level. With both the weekly and daily timeframe showing little in regards to potential direction at the moment, any trade we take on this pair will be done so with caution.

In the event price breaks through 118.00, a prompt retest could be seen forcing the market down towards a 4hr decision-point demand area seen at 116.80-117.30. This is something our team would be very interested in shorting if this move comes to pass.

Trading long from 118.00 (tentative buy orders are seen around the 118.02 mark) is something we’d also be quite interested participating in. Waiting for lower-timeframe buying confirmation however is crucial here, since psychological levels are usually prone to fakeouts. Assuming one finds an entry long here, a logical place to set a take-profit level comes in at 118.93; just below the combined 4hr supply/round number area at 119.38-118.99/119.00.

Current buy/sell levels:

Buy orders: 118.02 [Tentative] (Predicative stop-loss orders seen at: dependent on where once confirms the level).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that a major weekly supply area at 1.1806-1.1473 has recently been breached. As a result, the path north towards a major weekly swap level lurking just above at 1.1893 is likely clear.

Daily Timeframe: Yesterday saw the USD/CAD strongly close above 1.1800, which – like the weekly timeframe has likely cleared the path north for price to test the aforementioned weekly swap level. In the event that price retests the 1.1800 handle as support before hitting the weekly level, this would then provide us with a nice base, and target in which to trade. Let’s see what the 4hr timeframe has to say about this.

4hr Timeframe: For anyone who follows our analysis on a regular basis, you may recall us mentioning we were short the USD from a confirmed trade seen on the 30 minute timeframe (1.18034) at around 11.30am GMT time on Monday. This trade provided us with a tidy profit, but however did not reach our first target, which we admit was a little ambitious considering the strength of the USD at the moment.

The 4hr timeframe shows much the same as the daily timeframe with only a small (but crucial) difference. We mentioned in the daily timeframe that if price retested 1.1800 as support that this could be a nice base in which to enter long from. Looking at the 4hr timeframe suggests price could very well ignore the 1.1800 level altogether, and trade directly towards a 4hr demand area seen below at 1.1730-1.1749 before rallying towards the weekly swap level mentioned above (as per the blue arrows).

Current buy/sell levels:

Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DAX 30:

Weekly Timeframe: The weekly timeframe shows that relatively aggressive selling has seen the DAX decline in value down towards a weekly decision-point demand area visible at 9126-9467, where little to no buying interest is being seen at the moment.

Daily Timeframe: Yesterday saw the sellers seemingly lose steam around the 9467 mark, which is not surprising really since this area likely contained unfilled buy orders from the recent move north (17/12/14). However, we still firmly have our eye on the daily demand area seen a little lower at 9126-9233, as this will likely be a prime target for anyone short this index at the moment.

4hr Timeframe: The 4hr timeframe shows that here was clearly buying interest seen around the 4hr decision-point demand area at 9424-9487. Unfortunately for us though, there was very little confirming price action seen on the lower timeframes to take advantage of this move.

We feel there’s a good chance that the DAX will likely see a further decline from here, as most of the buyers have likely now been stopped out/consumed by the spike/tail seen below marked with a blue arrow at 9379. As a consequence, this will likely drive prices towards the aforementioned daily demand area, which if you look is situated beautifully around a 4hr minor swap level at 9139. All of this coupled with the fact that price would still be contained within the aforementioned weekly decision-point demand area (see above) makes it very hard not to consider buying if/when price reaches here.

Current buy/sell levels:

Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DOW 30:

Weekly Timeframe: The DOW recently saw a further decline in value and is at the time of writing coming very close to hitting an ignored weekly Quasimodo level seen at 17135. Let’s see what the lower timeframes offer.

Daily Timeframe: Looking on the daily chart shows us that price closed at 17362 yesterday, which is effectively a daily swap level. In our opinion, a decision clearly needs to be made here. Either the sellers have to take charge, which in turn will likely fuel fresh selling down towards the ignored weekly Quasimodo level at 17135, or the buyers jump in the driving seat and rally prices north.

4hr Timeframe: The 4hr timeframe shows that we were right in regards to the temporary support around 17500 not holding. We were however very wrong about the 4hr decision-point demand area at 17326-17381 (located around the daily swap level seen at 17362), as we placed a pending buy order (17392) just above, which as you can all see was well and truly stopped out.

With the majority of sellers now very likely consumed here, price should theoretically be free to continue south down towards a 4hr decision-point demand area coming in at 17084-17150 (located beautifully around the aforementioned ignored weekly Quasimodo level).

With all of the above taken into consideration, we’ve decided to allocate a pending buy order just above this 4hr decision-point demand area at 17159, with a stop set just below the zone at 17075.

Current buy/sell levels:

Buy orders: 17159 (Predicative stop-loss orders seen at: 17075).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that even with the recent buying activity currently being seen on the weekly chart, price still remains firmly capped between a weekly supply area seen at 1255.2-1226.1, and a weekly decision-point demand level coming in at 1136.3.

Daily Timeframe: The buyers and sellers are presently seen battling for position around a daily Quasimodo resistance level coming in at 1221.1. For anyone considering shorting here, do remain vigilant to the possibility that price may fakeout north here towards a daily supply area seen just above at 1238.1-1227.7 (located within the aforementioned weekly supply area).

4hr Timeframe: The 4hr timeframe shows that price has finally broken out of the ranging band seen between 1211.3/1172/8, and has, as expected seen a prompt retest before continuing north (which we unfortunately missed)!

The 4hr timeframe also shows that entering short around the daily Quasimodo resistance level (see above) may not be such a good idea considering that we see very little active supply between 1212.1 and the 4hr supply area above at 1244.5-1240.1 (located deep within the aforementioned weekly supply area).

With the above in mind, we are going to attempt to enter long (if price retraces of course) using lower-timeframe confirmation around the 1213.5 mark, just above a recently-formed 4hr decision-point demand area at 1205.3-1213.2. If we manage to find an entry long here, we are going to be ambitious and attempt to target 1238.85, just below the aforementioned 4hr supply area (as per the blue arrows).

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